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More on Government Accounting

Thanks to Norm Singleton on his blog Uncle Sam: worse than Enron

With the feds using cash accounting, there is the temptation to run up accounts payable in the current year and pay them in the next. Accrual accounting -- which publicly traded companies use and sometimes abuse -- would capture that particular game.

However, let's be careful here. Back in the Reagan years, Don Regan -- when he was Treasury Secretary -- wanted the government to "capitalize" major expenditures, as corporations do. Big potential downside here. Imagine government accountants capitalizing, say, a battleship over a 20 year "useful life." These big ticket items wouldn't fully hit the books for many years to come.

Hawks and the military-industrial complex would LOVE that accounting change.

-Robert Capozzi

Posted by Robert Capozzi on April 23, 2006 04:12 PM |

Free-for-all (frfr-ôl) -- n. A disorderly fight, argument, or competition in which everyone present participates.

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